Under Ryan’s plan, seniors currently in Medicare stay in the existing system. But in 2023, people over 65 would pick an insurance plan in a new Medicare exchange system, with Medicare competing with other insurers for their business.

The government would send money, called a premium-support payment, directly to the insurer picked by the consumer.

If the consumer picks a plan more expensive than the government premium payment they receive, the consumer must pay the difference out of pocket. If the consumer picks a cheaper plan, they pocket the difference in the form of a rebate check.

The Ryan plan set the premium payment to consumers at the cost of the second-least expensive government-approved plan.

The federal government will determine the minimum level of benefits that all plans must offer. The premium-support payment is capped at the growth of GDP, plus 0.5 percent. The subsidy will be adjusted based on the income level of the consumer.

After 2022, seniors are guaranteed they can enroll in any plan offered by the new exchanges and Medicare despite their health status or age.

In Ryan’s March 2012 plan, there is no limit of out-of-pocket costs incurred by seniors, and the plan doesn’t address prescription drug costs.

A key part of the plan is killing off the Obama administration’s Affordable Care Act.

The plan picks up out-of-pocket costs for seniors who qualify for both Medicare and Medicaid. Other seniors who don’t qualify for Medicaid also will have their out-of-pocket costs covered, based on their income level.